Bitcoin has overstepped the $1,000-level for the first time since January 5. The cryptocurrency has reached $1,023 as of the moment of writing, according to the CoinMarketCap.

The first month of 2017 was rather fluctuating for bitcoin. It started as the price crossed a $1,000 line on the very first days, hitting a three-year high. However, a few days after, the cryptocurrency dropped about 22%. The price slump was connected with attempts of Beijing to shore up the Chinese yuan. As far as most of bitcoin trading takes place in China, such move of the Chinese government could have affected the cryptocurrency price.

Jonathan Chester from Forbes has talked to major exchanges in the U.S., South America, China, and to Ark Investment Management, the first public fund manager to invest in bitcoin, to find out what caused such a volatility of bitcoin price.

Everyone shared an opinion that the reason for cryptocurrency price rise is its fundamental value proposition. Bitcoin has found its place in the financial world, which is based on a combination of bitcoin’s utility as a means of transferring payments, as well as serving as a store of value.

Although the very notion of bitcoin supposes absence of central authority guaranteeing the cryptocurrency, there have been $128 million in transactions and more than a billion dollars invested in blockchain technology companies as of the moment of writing.

Bitcoin companies note that 2016 was a year of doubling. Coinbase points out both a doubling of subscribers and a doubling of transactions per each subscriber. Ark says that the bitcoin network averaged $115,000 in transactions per minute in 2016, which is twice as much as in 2015.

Ark and GDAX have noticed signs of institutional investment in the cryptocurrency. Chris Burniske explained: “If you look at the volatility leading to the 2013 PBOC’s announcement with a following crash and compare to the volatility in late 2016, early 2017, you’ll realize that volatility is roughly ⅓ now of what it was in 2013. This shows growing maturity in the bitcoin markets and resilience to shocks”.

Burniske continued that the slow, steady rise of the bitcoin price means that “big whales” have begun to enter the market.

“The people who use to believe it is about blockchain without Bitcoin are starting to realize they can’t escape the fact that Bitcoin is the largest, oldest and most successful implementation of a public blockchain. With decisions on Bitcoin ETFs coming out as early as March 11th, institutional investors are becoming more interested. Investors realize that when ETFs come to market, it will be easier for the average trader to enter the market through traditional brokerages or IRAs”, echoes Adam White, head of GDAX.

There is one more possible reason for growing interest in bitcoin. Concerns over the stability of local currencies are driving the price high.

Brazil has a thriving Bitcoin market. Argentina has faced profound inflation in the past. Venezuela is going through that currently. Venezuela experienced 400% inflation in the last half of 2016. Fernando Gouveia, Head of Xapo Network, point to 400% increase of Xapo accounts at the same period.

Colombia has a busy market like Brazil, but no local exchanges, so purchases there are face to face transactions, the way bitcoin started in Brazil.

The demonetization in India was also among the events that had direct influence on the slow and stable growth of bitcoin price in 2016. But what caused the price spike at the end of the year? Chris Burniske explains: “The consensus narrative is pretty clear that Chinese volumes are driving most of the global trading markets”.

The year of 2016 was great for the cryptocurrency industry seeing a lot of interest and investment in bitcoin and blockchain companies. We’ll see what 2017 will bring.

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